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NYC office-sharing startup now among world's richest

13
Apr
2017
Anne-Kathrine Utzon
By tapping into the freelancing boom WeWork attract sky-high valuation.

WeWork serviced office

Being able to raise billions to expand and become one of the most valuable private companies in the world sounds like utopia for most entrepreneurs. Yet for the hip American workspace developer, it has become a reality in just a few years.

WeWork does not own a single office square metre, but has since 2010 rented offices on long-term contracts and decorated them into trendy office spaces with facilities such as table tennis, chic furniture and free beer on tap at every location. They then rent out the office space to the self-employed, freelancers, entrepreneurs and other creative startups on short-term contracts–with just one month's notice of termination.

Regus, the world's largest serviced office chain, have over 3,000 business centres in over 120 countries. By way of comparison, WeWork have only established about 150 offices in 12 countries. 

But WeWork - founded in 2010 - is already worth more than Regus on paper. The most recent count put its market value at $16 billion (with potential to rise to $20 soon), against the latter’s $2.7 billion.

With this sky-high valuation, WeWork are now tied to the social media giant Snapchat, which Forbes reports has around 60 million daily users. And WeWork are way ahead of successful companies like Spotify, Pinterest, Dropbox and software firm Zenefits, which is the fastest growing startup ever.

The "We generation"

A closer look at the valuation of WeWork shows that rather than being evaluated as a real estate firm, it`s treated by market moguls as an IT company.

IT companies are usually valued as higher than other types of business, because they are considered to be more scalable and thus better as investments.

 

WeWork serviced office

A possible reason for investors’ belief in the potential of the firm is the company's global network of innovators - the 'We Generation'. The network connects all members via WeWork's own app, which also allows them to work together, virtually, anywhere in the world.

WeWork's strong global network community is also the main reason why Chinese investors have invested $ 1.4 billion.

According to Artie Minson, President of WeWork, the global network allows WeWork to clearly differentiate itself from all other co-working spaces and business centers in the world.

"As we continue to scale WeWork, things that will continue to differentiate WeWork are having the most robust community, the best employees and the most innovative technology, design and service," says Artie Minson."

"We see that 70% of members collaborate in some way, and 50% actually are doing business with one another", says Eugen Miropolski, Managing Director for Europe and Israel.
  

Co-working spreads

Networking has today evolved to become a still bigger and more significant part of doing business in modern entrepreneurial companies. 

"WeWork has taken co-working to a whole new level by facilitating the network on their own global app. We see that the co-working mindset to share your knowledge, thoughts and ideas with other businesses creates great value for companies today. Co-working is becoming more common, especially among small businesses, self-employed, freelancers and others," says Jakob Dalhoff, CEO of MatchOffice.  

Today more people choose a freelancer-lifestyle with a freer work life, greater autonomy and flexibility – a priority that is the foundation for WeWork's business model. 

According to Matt Barrie, CEO of the world's largest freelancer portal Freelancer.com, businesses can easily and quickly post a project or task and find the right freelancer profile, which is why firms in many cases no longer need full-time employees.

"Oftentimes, employers don't need full-time support, but rather targeted, objective talent infusion. They can scale up or down as needed. It offers flexibility of budget, space and time, and rates that people can afford, with lower overhead expenses," Matt Barrie told the BBC. 

According to Forbes, 55 million freelance employees account for 35 percent of the total US workforce. By 2020, the statistic is expected to rise to 50 percent in both the US and UK.

WeWork serviced office

Freelance boom

Also in Denmark and other European countries the number of freelancers and self-employed is estimated to encrease in the coming years. In Denmark alone, the number of independent consultants has doubled since 2007.

 ”The demand for serviced offices, business centres and coworking spaces increases significantly these years - precisely because these types of offices match those employees in regard to flexibility, networking, fixed costs ect.," says Jakob Dalhoff. 

"It is accurately this trend WeWork have popped up in and have wisely understood to exploit. If the labor market as expected will boost the number of freelancers in the United States, China, Europe, etc., then WeWork, with its strong community and network, will not fail to be an even more golden and profitable business."

However, he adds, it can go in the opposite direction if the economy experience a down-turn and the labour market is experiencing economic decline.

 

Facts on WeWork

  • Who owns WeWork? WeWork is a privately held company that was co-founded by Adam Neumann and Miguel McKelvey in 2010 in New York City. WeWork has a variety of investors, such as Goldman Sachs, Harvard University and JPMorgan.
  • What is WeWork worth? The funding round in February 2017 valued WeWork at €16 billion. In the latest funding in February 2017 SoftBank set out to invest more than $3 billion in WeWork. If they close the deal WeWork will be worth $20 billions. 
  • How many members does WeWork have worldwide? More than 90.000.
  • How much space does WeWork lease globally? 7 million square feet, in 150 offices. 
  • In which countries is WeWork located? The US, Israel, England, Holland, Canada, Germany, Mexico, China, South Korea and Australia. Offices in India and France are coming very soon.
  • Do WeWork have any new initiatives? WeWork has recently launched a co-living concept where you can stay in a co-living space. 

 

What are WeWork’s member benefits? 

  • Beautiful, collaborative, physical spaces for teams of any size
  • More than 90,000 members who collaborate in-person and digitally 
  • An app that lets members connect and work virtually with other members around the world
  • Formal and informal events to encourage connections
  • Access to health care, payment processing, IT support, payroll, and legal
  • Education and training

 

Read more about WeWork:  
WeWork's homepage: www.wework.com
The Hustle: Why is WeWork worth so much?
The Real Deal, New York Real Estate News: What are we worth? 

 

 

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